diff --git a/src/buildstream/_projectrefs.py b/src/buildstream/_projectrefs.py
index 5095f1f83..931dc436d 100644
--- a/src/buildstream/_projectrefs.py
+++ b/src/buildstream/_projectrefs.py
@@ -146,7 +146,8 @@ def _lookup(self, toplevel, project, element, source_index, *, ensure=False):
             if not ensure:
                 return None
 
-            element_list.append({})
+            while len(element_list) <= source_index:
+                element_list.append({})
             node = element_list.mapping_at(source_index)
 
         return node
diff --git a/tests/format/project.py b/tests/format/project.py
index 227bd8c91..f4aa3cc40 100644
--- a/tests/format/project.py
+++ b/tests/format/project.py
@@ -20,6 +20,7 @@
 from buildstream import _yaml
 from buildstream.exceptions import ErrorDomain, LoadErrorReason
 from buildstream._testing import cli  # pylint: disable=unused-import
+from buildstream._testing import generate_project
 
 from tests.testutils import filetypegenerator
 
@@ -231,6 +232,24 @@ def test_project_refs_options(cli, datafiles):
     assert result1.output != result2.output
 
 
+# Assert that we can correctly track an element that has multiple sources such
+# that a remote source (i.e. `kind: tar`) comes after a `kind: local` source
+# when using project.refs
+#
+# `kind: local` sources are supposed to leave a gap in the project.refs file. However,
+# older versions of buildstream would incorrectly account for this gap. See issue for
+# more details: https://github.com/apache/buildstream/issues/1851
+@pytest.mark.datafiles(os.path.join(DATA_DIR, "project-refs-gap"))
+def test_project_refs_gap(cli, tmpdir, datafiles):
+    project = str(datafiles)
+    generate_project(project, config={
+        "aliases": {"tmpdir": "file:///" + str(tmpdir)},
+        "ref-storage": "project.refs",
+    })
+    result = cli.run(project=project, args=["source", "track", "target.bst"])
+    result.assert_success()
+
+
 @pytest.mark.datafiles(os.path.join(DATA_DIR, "element-path"))
 def test_element_path_project_path_contains_symlinks(cli, datafiles, tmpdir):
     real_project = str(datafiles)
diff --git a/tests/format/project/project-refs-gap/file b/tests/format/project/project-refs-gap/file
new file mode 100644
index 000000000..0637880d7
--- /dev/null
+++ b/tests/format/project/project-refs-gap/file
@@ -0,0 +1 @@
+This is a file
diff --git a/tests/format/project/project-refs-gap/target.bst b/tests/format/project/project-refs-gap/target.bst
new file mode 100644
index 000000000..ad8c2aeda
--- /dev/null
+++ b/tests/format/project/project-refs-gap/target.bst
@@ -0,0 +1,8 @@
+kind: import
+
+sources:
+- kind: local
+  path: file
+
+- kind: remote
+  url: tmpdir:/file